Medically Unnecessary Services

The Indictment alleges that ABC Home Health, Inc. ("ABC") and Florida Home Health Care Providers, Inc. ("Florida Home Health") referred Medicare beneficiaries to Drs. Nunez and Gonzalez for medically unnecessary home health care, and that the doctors received illegal kickback payments from the owners and operators of ABC and Florida Home Health in consideration for their signing prescriptions for therapy and home health services. Additionally, the doctors received Medicare payments for home health care services, including office visits and diagnostics tests.

It is further alleged that the defendant nurses, recruiters, and employees also received kickbacks and bribes for recruiting Medicare beneficiaries to be referred for home health services through doctors working with ABC and Florida Home Health (pointedly, Defendant Licet Diaz was charged with distributing kickbacks to patient recruiters on behalf of the owners of ABC and Florida Home Health).

On February 17, 2011, federal prosecutors announced the arrest of the Defendants.

Guilty Pleas

On August 23, 2011, Defendant Jose Nunez, 63, a physician who owned two medical offices, pleaded guilty in federal court in Miami to one count of conspiracy to commit health care fraud. According to his plea, Nunez admitted to having provided home health care and therapy prescription referrals to ABC and Florida Home Health from about January 2006 until March 2009, and that he knew co-conspirators at ABC and Florida Home Health had operated those agencies in order to fraudulently bill Medicare for expensive physical therapy and home health care services (which he and other doctors had prescribed) that were medically unnecessary and/or were never provided.

Federal prosecutors alleged that Nunez furthered the scheme by falsifying patient files with descriptions of non-existent medical conditions, including hand tremors, unsteady gait and poor vision. Those specific symptoms were reported by Nunez in order to create the false impression that the subject patients were unable to self-inject insulin and were homebound, which would qualify them for Medicare home health care benefits. As a result of Nunez's fraud, Medicare was defrauded to the extent of $1.5 million in home health care services that were medically unnecessary or never even provided.

Nunez is scheduled to be sentenced in December 2011, at which time he faces a maximum prison sentence of 10 years, fines, supervised release, and forfeiture. He faces sentencing in December 2011.

Another Case in Point

In a separate development, on August 23, 2011, after a six-day trial in the Southern District of Florida, a federal jury convicted Judith Negron, 40, owner of the Miami-area mental health care company American Therapeutic Corporation ("ATC"), of 24 felony counts including conspiracy to commit health care fraud, health care fraud, conspiracy to pay and receive illegal health care kickbacks, conspiracy to commit money laundering, money laundering and structuring to avoid reporting requirements.

ATC ran partial hospitalization programs ("PHPs") (a form of intensive treatment for severe mental illness) in seven different locations throughout South Florida and Orlando. Negron and her co-conspirators were further charged with using a related company, American Sleep Institute (ASI), to submit additional fraudulent Medicare claims.

It was alleged that Negron's scheme resulted in the submission of over $205 million in fraudulent claims to Medicare.

Federal prosecutors believe that the jury concluded that Negron, along with ATC co-owners Lawrence Duran and Marianella Valera, defrauded Medicare beginning in 2002 and continuing until they were arrested in October 2010. Previously, in April 2011, Duran and Valera pleaded guilty to all charges against them.

Bribes and Kickbacks

It was alleged that in consideration of the procurement of ineligible patients on behalf of ATC and ASI, that Negron, Duran, Valera and others paid bribes and kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses, and to patient brokers - in some situations, even the patients received kickbacks.

Moreover, prosecutors charged that the three co-conspirators used Medlink Professional Management Group Inc. ("Medlink"), which they owned and operated, to conceal the fraud and kickbacks scheme from Medicare and law enforcement. After Medicare paid ATC and ASI, Duran, Valera and others transferred the money to Medlink, from which they paid millions in kickbacks pursuant to a money-laundering scheme. The money laundering utilized such steps as creating false medical records in patient charts, concealing kickback payments as "transportation" payments, and creating sham companies with fake employee files to launder money

Two Places at Once

At trial, prosecutors introduced evidence showing that Negron signed patient documents as a supervising therapist without having treated the patients - for example, it appeared that she had signed files purporting to show that she was treating patients at the exact same time in both Boca Raton and Homestead, Florida. Further, prosecutors asserted that Negron knew other treating doctors were similarly robo-signing patient files without reading them or seeing the patients. In one particularly troubling case, prosecutors claimed that Negron charged for group psychotherapy provided to a patient who was in a neuro-vegetative state, who could not lift her head or respond. .

Guilty

Following the guilty verdict, Negron was remanded into custody. Duran and Valera have been in federal custody since their arrests in October 2010 and are scheduled to be sentenced in September 2011. The defendants' assets were frozen at the time of their arrests through civil forfeiture proceedings.

Defendant Margarita Acevedo pleaded guilty on April 7, 2011, and is also scheduled for sentencing in September 2011.

Negron, Duran and Valera each face the following maximum prison sentences on each count of:

UPDATE

On September 16, 2011, Duran, 49, was sentenced to 50 years in prison plus three years of supervised release following his prison term. Duran was also ordered to pay more than $87 million in restitution, jointly and severally with his co-defendants.

Additionally, ATC and Medlink Professional Management Group Inc., two of the corporations that Duran and Valera used to commit fraud, were sentenced to five years of probation per count and ordered to pay restitution of $87 million. Both corporations have been defunct since their owners were arrested in October 2010.

For years, Mr. Duran stole millions of taxpayer dollars by defrauding Medicare and preying upon vulnerable citizens suffering from Alzheimer's disease, dementia and substance abuse. Instead of providing patients with the treatment they needed, Mr. Duran and his co-conspirators used them as props to fill their fraudulent mental health centers. As a further insult, Mr. Duran created an organization to lobby Congress for additional funds to support the mental health services his fraud scheme purported to provide. Today's sentence - the longest ever imposed in a Medicare Fraud Strike Force case - reflects the reprehensibility of the defendant's conduct, and is a powerful warning sign to others inclined to cheat the Medicare program.﻿﻿﻿﻿

On September 19, 2011, Marianella Valera, 40, the owner of ATC, was sentenced to 35 years in prison followed by three years of supervised release; and ordered to pay more than $87 million in restitution, jointly and severally with her co-defendants.

BILL SINGER is a lawyer who represents securities-industry firms, individual registered persons, Wall Street whistleblowers, and defrauded public investors. For over three decades, Singer has represented clients before the American Stock Exchange, the New York Stock Exchange, the Financial Industry Regulatory Authority (formerly the NASD), the United States Securities and Exchange Commission, and in criminal investigations brought by various federal, state, and local prosecutors. He has the distinction of representing witnesses during Congressional investigations. In 2015, Singer achieved a significant award in excess of $1 million from the Securities and Exchange Commission on behalf of a whistleblower client.

Singer is presently Of Counsel to a law firm and the publisher of the BrokeAndBroker.com Blog, which was rated as one of the industry's top eight destination websites and the leading legal/regulatory blog by "Investment News."

Before entering the private practice of law, Singer was employed in the Legal Department of Smith Barney, Harris Upham & Co.; as a regulatory attorney with both the American Stock Exchange and the NASD (now FINRA); and as a Legal Counsel to Integrated Resources Asset Management. Singer was formerly Chief Counsel to the Financial Industry Association; General Counsel to the NASD Dissidents' Grassroots Movement; and General Counsel to the Independent Broker-Dealer Association. He was registered for a number of years as a Series 7 and Series 63 stockbroker.

Singer regularly appears as a commentator on television and radio, and is frequently quoted in the press. He is an outspoken critic of ineffective regulation and an advocate for economic and political sanity.